Wednesday, 12 October 2011

Keen Behavioural Finance 2011 Lecture 8 - Professor Steve Keen

Explaining the "Monetary Circuit Theory" of capitalism. I show that the dilemmas that hobbled Circuit Theory for so long were simple mistakes in dynamic modelling, which reflect poorly not so much on Circuit theorists themselves, but economists in general, since even non-orthodox economists are locked into the static ways of thinking they were taught by neoclassical lecturers.

Extending the model developed in the first half of the lecture to include payment of wages and consumption. The resulting model "works" in that it is possible for capitalists to borrow money, produce output, and make a profit.